10-Q 1 asapexpo10q033118.htm 10-Q


U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549    
 

 
FORM 10-Q
 

 
(MARK ONE)
 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2018
 
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
 
For the transition period from  ______________ to ______________
 
Commission file number: 001-51554
 
ASAP EXPO, INC.
(Exact name of small business issuer as specified in its charter)
 
Nevada
22-3962936
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification Number)
 
9436 Jacob Lane, Rosemead, CA 91770
91770
 (Address of principal executive offices)
 (Zip Code)
 
Issuer’s telephone number: (213) 625-1200

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes     No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes    No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
 
Large accelerated filer   
Accelerated filer   
Non-accelerated filer ☐  (Do not check if a smaller reporting company) 
Smaller reporting company  
 
Emerging growth company   
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No

Number of shares outstanding of the issuer’s classes of common equity, as of May 15, 2018, 14,445,363 Shares of Common Stock (One Class)
 
Transitional Small Business Disclosure Format: Yes     No



TABLE OF CONTENTS
 
 
 
Page
PART I   Financial Information
 
 
 
 
Item 1.
3
 
3
 
4
 
5
 
6
 
 
 
Item 2.
11
Item 3.
15
 
 
 
PART II  Other Information
 
 
 
 
Item 1.
16
Item 2.
16
Item 3.
16
Item 4.
Mine Safety Disclosures
16
Item 5.
16
Item 6.
16
17


 

 
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
 
ASAP EXPO, INC.
 
BALANCE SHEETS
 
 
           
 
 
March 31,
   
December 31,
 
 
 
2018
   
2017
 
 
 
(Unaudited)
       
 
           
ASSETS
           
Current Assets
           
Cash
 
$
236,750
   
$
90,282
 
Due from affiliated companies
   
106,990
     
20,881
 
Total Current Assets
   
343,740
     
111,163
 
 
               
Furniture and equipment, net
   
75,760
     
78,763
 
 
               
Total Assets
 
$
419,500
   
$
189,926
 
 
               
 LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
 
               
Current Liabilities
               
Accounts payable and accrued expenses
 
$
325,316
   
$
342,924
 
Accrued expenses – officer
   
52,500
     
42,000
 
Auto loan, current
   
4,027
     
4,003
 
Income tax payable
   
140,533
     
84,684
 
Line of credit, officers
   
198,492
     
212,140
 
Due to affiliated company
   
70,000
     
-
 
Total Current Liabilities
   
790,868
     
685,751
 
 
               
Long-Term Liabilities
               
Auto loan, noncurrent
   
15,245
     
16,261
 
Equipment loan, noncurrent
   
12,299
     
12,299
 
Total Long-Term Liabilities
   
27,544
     
28,560
 
 
               
Total Liabilities
   
818,412
     
714,311
 
 
               
Stockholders’ Deficit
               
Preferred stock, 5,000,000 shares authorized; zero shares issued and outstanding
   
-
     
-
 
Common stock, $.001 par value, 495,000,000 shares authorized,
14,445,363 and 14,445,363 shares issued and outstanding at March 31, 2018 and December 31, 2017
   
14,445
     
14,445
 
Additional paid in capital
   
(902,272
)
   
(902,272
)
Retained earnings
   
488,915
     
363,442
 
Total Stockholders’ Deficit
   
(398,912
)
   
(524,385
)
 
               
Total Liabilities and Stockholders’ Deficit
 
$
419,500
   
$
189,926
 
 
The accompanying notes are an integral part of these condensed unaudited financial statements.


ASAP EXPO, INC.
 
CONDENSED STATEMENTS OF OPERATIONS
 
(UNAUDITED)
 
 
           
 
 
Three Months Ended March 31,
 
 
 
2018
   
2017
 
 
           
Revenues:
           
Consulting fees
 
$
53,544
   
$
215,000
 
Consulting fees, related parties
   
279,500
     
154,500
 
Management fee
   
-
     
19,200
 
Management fee, related parties
   
255,161
     
-
 
Total revenues
   
588,205
     
388,700
 
 
               
Cost of Sales
               
Consulting expense
   
99,500
     
252,000
 
Total cost of sales
   
99,500
     
252,000
 
 
               
Gross Profit
   
488,705
     
136,700
 
 
               
Operating expenses:
               
General and administrative
   
304,006
     
136,456
 
Total operating expenses
   
304,006
     
136,456
 
 
               
Income from operations
   
184,699
     
244
 
 
               
Other Income (Expense)
               
Interest expense
   
(3,214
)
   
(9,241
)
Total other income (expense), net
   
(3,214
)
   
(9,241
)
 
               
Income before income taxes
   
181,485
     
(8,997
)
Income taxes provision
   
56,012
     
800
 
 
               
Net (loss) Income
 
$
125,473
   
$
(9,797
)
 
               
Net income (loss) per common share
               
Basic and diluted
 
$
0.01
   
$
(0.00
)
 
               
Weighted average common shares outstanding
               
Basic and diluted
   
14,445,363
     
14,445,363
 

The accompanying notes are an integral part of these condensed unaudited financial statements.
 

ASAP EXPO, INC.
 
CONDENSED STATEMENTS OF CASH FLOWS
 
(UNAUDITED)
 
 
           
 
 
Three Months Ended March 31,
 
 
 
2018
   
2017
 
Operating Activities:
           
Net Income (loss)
 
$
125,473
   
$
(9,797
)
Adjustments to reconcile net income to net cash
provided by operating activities:
               
Depreciation expense
   
3,003
     
2,741
 
Gain on disposal of fixed assets
   
-
     
-
 
Changes in operating assets and liabilities:
               
Prepaid expenses and deposit
   
-
     
(50,000
)
Accounts payable and accrued expenses
   
(17,608
)
   
(19,859
)
Accrued expenses – officer
   
10,500
     
10,500
 
Income tax payable
   
55,849
     
800
 
Due from affiliated companies
   
(86,109
)
   
(41,648
)
 
               
Net cash provided by (used in) operating activities
   
91,108
     
(107,263
)
 
               
Net cash provided by (used in) investing activities
   
-
     
-
 
 
               
Financing Activities:
               
Payments on auto loan
   
(992
)
   
(1,227
)
Advance from (Repayment to) affiliated company
   
70,000
     
-
 
Outstanding checks payable
   
-
     
70,928
 
Proceeds from borrowings on credit line from officers
   
-
     
5,001
 
Repayments of borrowings on credit line from officers
   
(13,648
)
   
-
 
 
               
Net cash provided by (used in) financing activities
   
55,360
     
74,702
 
 
               
Net increase (decrease) in cash
   
146,468
     
(32,561
)
 
               
Cash, beginning of period
   
90,282
     
32,761
 
 
               
Cash, end of period
 
$
236,750
   
$
200
 
 
               
Supplemental disclosures of cash flow information:
               
    Cash paid during the period
               
        Interest
 
$
219
   
$
103
 
        Income taxes
 
$
163
   
$
-
 

 The accompanying notes are an integral part of these condensed unaudited financial statements.


ASAP EXPO, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
ORGANIZATION
 
ASAP Expo, Inc. (“ASAP Expo” or the “Company”) d.b.a. ASAP International Holdings, was incorporated on April 10, 2007 under the laws of the State of Nevada.
 
ASAP Expo is a holding company that operates commercial real estate consulting for Chinese Institutions and high net worth individuals. Our mission is to be the bridge between China and the Western world.
 
ASAP Commercial Real Estate division advisory provides Chinese institutions and high net worth individuals with all real estate related services focusing on hospitality including acquisition advisory, financing, asset management, and strategic repositioning.
 
On the hospitality acquisition side, we represent buyers at all stages of the process, from advice on selection of brands, location, opportunity sourcing and due diligence to securing debt financing. Our clients have the advantage of our local market knowledge and contacts in capital markets around the globe, as well as our deep experience in real estate strategy and management.
 
Prior to July 2011, the investment banking services division was the core business of ASAP Expo. ASAP Expo helped small and medium sized businesses raise funds and promote business through capital markets.
 
In July 2011, ASAP Expo transitioned its core business to providing real estate advisory services from investment banking advisory services for Chinese companies.

Unaudited Interim Financial Information

These unaudited interim financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2018.

The balance sheets and certain comparative information as of December 31, 2017 are derived from the audited financial statements and related notes for the year ended December 31, 2017 (“2017 Annual Financial Statements”), included in the Company’s 2017 Annual Report on Form 10-K. These unaudited interim financial statements should be read in conjunction with the 2017 Annual Financial Statements.
 
BASIS OF PRESENTATION
 
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
 
CASH AND CASH EQUIVALENTS
 
Cash and cash equivalents consist of cash on hand, cash on deposit with banks, and highly liquid debt investments with a maturity of three months or less when purchased. The Company has no cash equivalents as of March 31, 2018 and December 31, 2017, respectively.
 
GOING CONCERN
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

 
At March 31, 2018, the Company had a stockholders’ deficit of $398,912 and a negative working capital of $447,128, which mainly resulted from the accumulated deficit of its former parent company that was transferred to the Company upon its spin-off from the parent company, and a lack of profitable operating history. The Company hopes to increase revenues from its real estate business and financial advisory services business. In the absence of significant increases in revenues, the Company intends to fund operations through additional debt and equity financing arrangements. The successful outcome of future activities cannot be determined at this time and there are no assurances that if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
 
The Company’s success is dependent upon numerous items, certain of which are the successful growth of revenues from its services and its ability to obtain new customers in order to achieve levels of revenues adequate to support the Company’s current and future cost structure, for which there is no assurance. Unanticipated problems, expenses, and delays are frequently encountered in establishing and maintaining profitable operations. These include, but are not limited to, competition, the need to develop customer support capabilities and market expertise, technical difficulties, market acceptance and sales and marketing. The failure of the Company to meet any of these conditions could have a materially adverse effect on the Company and may force the Company to reduce or curtail operations. No assurance can be given that the Company can achieve or maintain profitable operations.

The Company believes it will have adequate cash to sustain operations until it achieves sustained profitability. However, until the Company has a history of maintaining revenue levels sufficient to support its operations and repay its working capital deficit, the Company may require additional financing. Sources of financing could include capital infusions, additional equity financing or debt offerings. There can be no assurance that funding will be available on acceptable terms, if at all, or that such fund, if raised, would enable the Company to achieve or sustain profitable operations.
 
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the classification of liabilities that might result from the outcome of these uncertainties.
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
The Company’s financial instruments consist of cash, prepaid expenses and other receivables, accounts payable, accrued liabilities and due to/from affiliated company.  The fair value of these financial instruments approximate their carrying amounts reported in the balance sheets due to the short term maturity of these instruments.

Fair Value Measurements
 
ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
 
Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
 
Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
 
Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 
The Company’s financial instruments consisted of cash, accounts payable and accrued liabilities, advances to due to or from affiliated companies, notes payable to officers.  The estimated fair value of cash, accounts payable and accrued liabilities, due to or from affiliated companies, and notes payable approximates its carrying amount due to the short maturity of these instruments.
 
USE OF ESTIMATES
 
The preparation of financial statements in conformity with the GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 

REVENUE RECOGNITION
 
Accounting Standards Codification (“ASC”) 605, Revenue Recognition which outlines the basic criteria that must be met to recognize revenue and provide guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with Securities and Exchange Commission. Management believes the Company’s revenue recognition policies conform to ASC 605. 
 
Revenues are mainly consulting fees. The consulting fees are recognized when earned.  Consulting fees from real estate advisory services that are subject to refund are recorded as deferred revenue until the project is completed and the fees are no longer refundable.
 
INCOME TAXES
 
Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, net of operating loss carry forwards and credits, by applying enacted statutory tax rates applicable to future years.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred tax assets will be realized.  Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
 
EARNINGS PER SHARE
 
A basic earnings per share is computed by dividing net income to common stockholders by the weighted average number of shares outstanding for the year. Dilutive earnings per share include the effect of any potentially dilutive debt or equity under the treasury stock method, if including such instruments is dilutive. The Company’s diluted earnings/loss per share is the same as the basic earnings/loss per share for the three months ended March 31, 2018 and 2017, as there are no potential shares outstanding that would have a dilutive effect.
 
NOTE 2 - PROPERTY AND EQUIPMENT

Equipment consists of the following:
 
 
 
March 31,
   
December 31,
 
 
 
2018
   
2017
 
Furniture & Fixtures
 
$
35,812
   
$
35,812
 
Office Equipment
   
10,510
     
10,510
 
Automobile
   
27,657
     
27,657
 
Leasehold Improvements
   
24,527
     
24,527
 
 
   
98,506
     
98,506
 
Less: Accumulated depreciation
   
(22,746
)
   
(19,743
)
 
 
$
75,760
   
$
78,763
 

NOTE 3 - RELATED PARTY TRANSACTIONS
 
At March 31, 2018 and December 31, 2017, ASAP Expo was owed $106,990 and $20,881 from affiliated companies in which ASAP Expo’s officers are also owners and officers. The advance has no written note, is non-interest bearing and payable on demand to the Company and expected to be paid within one year.

At March 31, 2018, ASAP Expo owed $70,000 to an affiliated company in which ASAP Expo’s officers are also owners and officers. The advance has no written note, is non-interest bearing and payable on demand.

For the three months ended March 31, 2018 and 2017, consulting and management fees from affiliates was $534,661 and $154,500, respectively.

The Company has a revolving line of credit totaling $1,800,000 with Frank Yuan, CEO and Jerome Yuan, his son. The line of credit bears interest at 6% per annum and is due upon demand, as amended. On December 31, 2014, the convertible note was amended to waive the right of conversion and will be used as a line of credit. During the three months ended March 31, 2018 and 2017, the Company incurred interest expense totaling $2,941 and $9,088 in connection with the Line. The balance of the credit line as of March 31, 2018 was $198,492 and the accrued interest on the line of credit was $35,041. The balance of the credit line as of December 31, 2017 was $212,140 and the accrued interest was $32,100.




Currently, the Company is leasing office space from its officer under a month by month basis. The lease provides for monthly lease payments of $3,500 for its current officer space and $5,000 for a new office space. The Company will move into the new office space once renovation is completed.

The son of the Company’s officer (“Son”) receives salary from the Company for work performed. During three months ended March 31, 2018 and 2017, The Son received salary of $60,000 and $0, respectively.
 
NOTE 4 - AUTO LOAN

In April 2017, the Company traded-in its old vehicle for a new vehicle with a financing agreement of $4,868 down and 2.39% interest. Future minimum payments and the obligations due under the auto loan are as follows:

For the Year Ended December 31:
     
2018
 
$
2,674
 
2019
   
4,091
 
2020
   
4,190
 
2021
   
4,292
 
2022
   
4,025
 
Less Current Portion
   
(4,027
)
Long Term Portion
 
$
15,245
 

NOTE 5 - EQUIPMENT LOAN

In September 2015, the Company installed a solar system on its leased office for $17,570 with a 30-year loan at 5.49% interest. Each payment date, the Company will pay at least the “Total Amount Due” that is displayed on the monthly bill. The Total Amount Due will be the sum of all past due amounts plus the “Current Monthly Payment” that will be displayed on the monthly bill. Current Monthly Payments will be calculated as follows: the amount of kWh produced for the preceding month by the system; multiplied by the applicable agreed Equivalent Rate per kWh. The “Equivalent Rate per kWh” is based upon 5 factors: 1) the loan balance (which includes any accrued interest); 2) the Loan Term; 3) the applicable APR; 4) the expected production of the system; and 5) 2.50 % kWh annual rate escalator. The expected production of the system is an estimate, the actual payments could be higher or lower depending on the actual production from the system. If there is a remaining balance at the end of the loan term, the outstanding balance can be refinanced for an additional 12 months or for a term that is required by law. Estimated future Current Monthly Payments are as follows:

For the Year Ended December 31:
     
2018
 
$
690
 
2019
   
704
 
2020
   
717
 
2021
   
732
 
2022
   
746
 
2023
   
761
 
Thereafter
   
22,358
 
 
NOTE 6 - INCOME TAXES

The income taxes provision for the three months ended March 31, 2018 consists of current income tax of $56,012.
 
Uncertain Tax Positions
 
Interest associated with unrecognized tax benefits is classified as income tax and penalties are included in selling, general and administrative expenses in the statements of operations and comprehensive income.
 
For the three and the three months ended March 31, 2018 and 2017, the Company had no unrecognized tax benefits and related interest and penalties expenses. The Company’s 2014, 2015, 2016 and 2017 tax years remain subject to examination by the U.S. tax authorities.



NOTE 7 - SHAREHOLDERS’ DEFICIT
 
Common Stock
 
On July 29, 2017, the Board of Directors of the Company approved to increase the authorized shares of the Company to 500,000,000 (the “Increase”), with 495,000,000 shares being Common Stock and 5,000,000 shares being preferred stock, subject to Stockholder approval. The Majority Stockholder approved the Increase by written consent in lieu of a meeting on July 29, 2017. The increased number of authorized shares were retroactively presented on balance sheets.

At March 31, 2018 and December 31, 2017, the Company had 14,445,363 shares issued and outstanding at par value $0.001 per share.

NOTE 8 - COMMITMENT
 
Starting January 1, 2014, the Company leased office space from its officer, Frank Yuan under a month by month basis. The lease provides for monthly lease payments of $3,500.

Starting March 1, 2018, the Company leased a new office space from its officer, Frank Yuan under a month by month basis. The lease provides for monthly lease payments of $5,000.  The Company will move into the new office space once renovation is completed.
 
NOTE 9 - CONCENTRATION
 
For the three months ended March 31, 2018, five customers accounted for 85% (28%, 19%, 13%, 13% and 12%) of the Company’s consulting and management fee income, all of which are affiliates of the Company.  For the three months ended March 31, 2017, two customers accounted for 84% (55% and 29%) of the Company’s consulting fee income, one of which is affiliate of the Company. The loss of any of these customers could have a material adverse effect on the Company’s financial position and results of operations.
  
NOTE 10 – SUBSEQUENT EVENT

On April 12, 2018, Frank Yuan converted $144,445 of the line of credit to 144,445,000 shares, then sold and transferred his 144,445,000 shares, representing 90% of the Company, to GreenBox POS, LLC, a San Diego based High-Tech company.



ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
 
The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the audited financial statements and the related notes thereto included elsewhere in this annual report for the period ended December 31, 2017. This annual report contains certain forward-looking statements and the Company’s future operating results could differ materially from those discussed herein. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.

OVERVIEW
 
ASAP Expo (“ASAP” or “The Company” or “Our” or “We”) mission is to be the bridge between China and the Western world. ASAP is a holding company that assists Chinese institutional and high net worth individuals with acquisition advisory and asset management of U.S. hotels.

Our investors include AVIC International USA, Junson Capital, Urban Commons, Sky Harbor Management, Shenzhen New World, American Curvet, and USA Heritage.

From August 2010 until now, our group has provided consulting services regarding purchasing 20 hotels primarily in California, Florida, Colorado, Connecticut, Georgia and Michigan. Hotel brands include Marriott, Hilton, Westin, Doubletree by Hilton, Four Points by Sheraton, and Holiday Inn. We are one of the most active hotel buyers in the market.

ASAP believes we will continue this growth for the next couple of years, taking advantage of current below replacement cost assets with reasonable cap rates and value-add opportunities in the current U.S. hotel market.

RESULTS OF OPERATIONS
 
Revenues

Since the Company’s primary business is based upon potential transactions in real estate, the Company is subject to variance in revenues due to investors sentiment towards real estate.

Substantially all of our revenues are in the form of consulting fees collected from our clients, usually negotiated on a transaction-by-transaction basis. The Company’s consulting fees primarily consist of revenue derived from transaction commission received from acquisition advisory. The Company earns the consulting fees by sourcing the deal, underwriting financials, coordinating due diligence on all contracts, recommending lenders, hiring third party property management companies, and negotiating franchise agreements. Another revenue source for the company includes asset management fees, which consist of supervision of daily, weekly, and monthly operating results of the hotel, review of capital expenditure requests, communication with lenders, negotiating personal and real property tax assessments, and most importantly, oversight on brand relations.

The Company’s clients include a concentration of two to three main clients. Our concentration of clients does provide a risk for revenue growth. The Company has established strong relationships with our clients. Our business and client relationships, and our culture and philosophy are firmly centered on putting the clients’ interests first. We have been building strong reputations in the hospitality industry which is bringing several new potential clients. We expect to have steady revenue stream from our 3 major clients while building new client base for future revenue growth. We believe that our product offerings, asset management services, client diversification, expertise in a property types and national platform have the potential to create a sustainable revenue stream within the U.S. commercial real estate sector.

During the three months ended March 31, 2018, the Company earned consulting fees of $333,044 including $279,500 from affiliated companies, as compared to consulting fees of $369,500 for the same period last year of which $154,500 was from affiliated companies. During the first quarter of 2018, the Company also earned management fees of $255,161 from affiliates as compared to management fee of $19,200 for the same period last year. The lower consulting fee in the first quarter of 2018 was mainly because the Company received mostly regular consulting fees in the first quarter of 2018 versus closing one big hotel acquisition deal in the same period last year. The increase in management fees in the first quarter of 2018 was mainly because hotel management fees used to be paid to another company owned by its officers. 



Cost of Sales

In the course of providing real estate advisory services and asset management services, the Company pays consulting fees for finding properties and other services that facilitate the closing of deals.  

Cost of sales consisting mainly consulting expense, is primarily the result of the commissions and other incentive compensation incurred directly related to acquisition advisory services. Therefore, the fluctuation in revenue will directly impact the cost of sales.
 
For the three months ended March 31, 2018, the Company incurred consulting expense of $99,500 for providing advisory services in real estate acquisition as compared to $252,000 for the same period last year. The lower consulting expense in the first quarter of 2018 was mainly because the Company incurred mostly regular consulting expenses in the first quarter of 2018 versus paying a larger sum of consulting expense related to the closing of one big hotel acquisition deal in the first quarter of 2017 mentioned above.

Operating Expenses
 
General and administrative (“G&A”) expenses consist primarily of administrative personnel costs, facilities expenses, and professional fee expenses.
 
For the three months ended March 31, 2018, G&A expenses increased by $167,550 or 122.8% to $304,006 compared to $136,456 for the same period last year. The increase in the first quarter of 2018 was mainly due to higher payroll expense and related employee benefits and insurance as one highly paid manager was put back on payroll and more employees were hired for managing more hotels, higher professional fees related to the fees paid to a crowd funding platform for fund raising, higher staff travel expense for managing more hotels and the new office rental starting in March 2018,

Interest Expense

Interest expense decreased to $3,214 during the three months ended March 31, 2018 from $9,241 for the same period last year. The decrease in interest expense was mainly due to the decrease in average balances of the officer line of credit.
 
Net Income

The Company recorded a net income of $125,473 for the three months ended March 31, 2018 as compared to a net loss of $9,797 for the same period last year. The increase in net income was mainly due to the higher gross profit and lower consulting expense, offset by higher G&A expenses and higher income taxes provision.

LIQUIDITY AND CAPITAL RESOURCES

During the next twelve months, ASAP Expo will focus on its real estate transactions to generate additional revenue. With the net revenue from its services, and continuing support from its major shareholders to provide a note payable, management believes ASAP Expo will have enough net working capital to sustain its business for another 12 months.
 
The forecast of the period of time through which ASAP Expo’s financial resources will be adequate to support its operations is a forward-looking statement that involves risks and uncertainties. ASAP Expo’s actual funding requirements may differ materially as a result of a number of factors, including unknown expenses associated with the cost of providing real estate advisory, investment banking, and management consulting services.

The Report of the Company’s Independent Registered Public Accounting Firm on our December 31, 2017 financial statements includes an explanatory paragraph stating that the Company has negative working capital and has an accumulated stockholders’ deficit, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


Liquidity and Capital Resources

Our working capital for the periods presented is summarized as follows:
 
 
 
As of
March 31, 2018
($)
   
As of
December 31, 2017
($)
 
Current assets
 
$
343,740
   
$
111,163
 
Current liabilities
   
790,868
     
685,751
 
Working capital
 
$
(447,128
)
 
$
(574,588
)
 
The following table shows cash flows for the periods presented:

 
 
Three Months Ended
March 31,
 
 
 
2018
   
2017
 
Net cash provided by (used in) operating activities
 
$
91,108
   
$
(107,263
)
Net cash provided by (used in) investing activities
   
-
     
-
 
Net cash provided by (used in) financing activities
   
55,360
     
74,702
 
Net increase (decrease) in cash
 
$
146,468
   
$
(32,561
)

Operating Activities

For the three months ended March 31, 2018, net cash provided by operating activities was $91,108. This was primarily due to a net income of $125,473, adjusted by non-cash related expenses of depreciation of $3,003, then decreased by unfavorable changes in working capital of $37,368. The unfavorable changes in working capital resulted from an increase in due from affiliated companies of $86,109 and a decrease in accounts payable and accrued expenses of $17,608, offset by an increase in accrued expenses-officer of $10,500 and an increase in income tax payable of $55,849.

For the three months ended March 31, 2017, net cash used in operating activities was $107,263. This was primarily due to a net loss of $9,797, adjusted by non-cash related expenses of depreciation of $2,741, then decreased by unfavorable changes in working capital of $100,207. The unfavorable changes in working capital mainly resulted from a deposit of $50,000 for office building, an increase in due from affiliated companies of $41,648 and a decrease in accounts payable and accrued expenses of $19,859, offset by an increase in accrued expenses-officer of $10,500 and an increase in income tax payable of $800.

Financing activities

For the three months ended March 31, 2018, net cash provided by financing activities was $55,360 which was mainly due to an advance from affiliated company of $70,000, offset by net repayment to line of credit from officer of $13,648 and payments on auto loan of $992.

For the three months ended March 31, 2017, net cash provided by financing activities was $74,702 which was mainly resulted from net proceeds from line of credit from officer of $5,001 and the outstanding checks payable of $70,928, offset by payments on auto loan of $1,227.

CRITICAL ACCOUNTING POLICIES
 
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in the our financial statements and the accompanying notes. The amounts of assets and liabilities reported on our balance sheet and the amounts of revenues and expenses reported for each of our fiscal periods are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition, stock based compensation and the valuation of deferred taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of the financial statements:


Revenue Recognition
 
Accounting Standards Codification (“ASC”) 605, “Revenue Recognition” outlines the basic criteria that must be met to recognize revenue and provide guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with Securities and Exchange Commission. Management believes the Company’s revenue recognition policies conform to ASC 605.   
 
Revenues are mainly consulting fees. The Consulting fees are recognized when earned.  Consulting fees subject to refund are recorded as deferred revenue until the project is completed and the fees are no longer refundable. 

Income Taxes
 
The Company accounts for income taxes under ASC 740, “Income Taxes.” Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Management provides a valuation allowance for significant deferred tax assets when it is more likely than not that such asset will not be recovered.

 


ITEM 3. CONTROLS AND PROCEDURES

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report.  Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure.  Our disclosure controls and procedures include components of our internal control over financial reporting and, as such, are designed to provide reasonable assurance that such information is accumulated and communicated to our management.  Management’s assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met (see the section below in this Item 3 entitled Limitations on the Effectiveness of Internal Controls).
 
Changes in Internal Controls Over Financial Reporting
 
There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) that occurred during the period covered by this Report, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
Limitations on the Effectiveness of Internal Controls
 
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
 
 




PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
 
Management currently is not aware of any legal matters or pending litigation that would have a significant effect on the Company’s financial statements as of March 31, 2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS
 
31.1
32.1
101.INS
XBRL Instance Document*
101.SCH
XBRL Taxonomy Extension Schema Document*
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB
XBRL Taxonomy Extension Label Linkbase Document*
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document*
 
* Furnished electronically with this filing
 





SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
ASAP EXPO, INC.
(Registrant)
 
 
 
 
 
Date: May 21, 2018
By:
/s/ Frank S. Yuan
 
 
 
Frank S. Yuan,
Chairman, Chief Executive Officer
 
 
 
 
 
 
17